Tipping Point: Food processing

Former high-school teacherWendell Murphy gave farmers in Eastern North Carolina a textbook example of how to raise pigs for profit. He was, at one time, the nation’s largest pork producer and helped the state develop what became a $2 billion industry. He sold Murphy Family Farms in 2000 to Virginia-based Smithfield Foods.

In the early going, back in the 1960s, we didn’t have large processing in North Carolina. There were so few pigs being produced in North Carolina that Smithfield Foods and Gwaltney in Virginia were having to bring in pigs from the Midwest. They were having to pay for the freight and for the pork. Let’s say it was 30 cents a pound in Ohio and Indiana, and it cost 3 cents a pound to haul them here. They could pay producers in North Carolina more than 30 cents a pound because freight costs were less. Feed prices were higher for us because we had to pay for corn from out of the Midwest, but we figured out a better way to produce them. So we were producing the pigs for a lower cost and selling for a higher price. And let me tell you something, that’s the way you want to run things. It started in the ’70s and topped out in the ’80s and ’90s, when Smithfield Foods built this large plant over in Bladen County — the largest pork-processing plant in the world — to take advantage of all this livestock production that was taking place. Now we’re saturated; we don’t need any hogs out of the Midwest to satisfy the East Coast packers. But we’re coming to a tipping point on the price of livestock production. The reason is energy, which obviously has far-ranging effects. The price of grain to feed the livestock is substantially higher just on the thought that there might be more ethanol plants built around the country. That could create a serious shortage of feed for the industry. It makes no sense to me. You have to have fuel to cultivate the field, to harvest the crops, to haul them to market, but I don’t know how much we gain by producing the ethanol. I’ve asked the question over and over, and nobody has answered it satisfactorily for me yet.